By Teresa Rivas

Shares of Sirius XM Radio (SIRI) ended the day down 2.4%, and was falling 0.2% in after-hours trading. Yet Lazard Capital Market’s Barton Crockett thinks that the shares could rise nearly 40%, to $5.

That’s the target price he and Clark Lampen have on the shares, which they rate a Buy. In a note out today, they write that the Street should have taken the announcement Monday morning that Sirius and MLB renewed their agreement to extend live broadcasts through 2021 as a more bullish sign. (The new deal also expands coverage to higher-end Sirius users with Premier and All Access plans.)

They note that the news comes after the company announced last week that it had signed away Piolin, a major Spanish-language radio personality, from Univision to an exclusive deal.

“We see these deals as a meaningful step up in content that drives sub growth and separates Sirius XM from music services like Pandora (P) and Spotify,” they write. “We also believe these deals are consistent with guidance for long-term program cost improvements.”

Read more details:

MLB — expanded rights, cost outlook little changed. The former MLB deal on XM cost $60M per year through 2015. We had assumed in renewal in 2016 that costs would drop to $12M per year, consistent with the write-down of the MLB contract at the time of the Sirius/XM merger, the norm that MLB always costs less than NFL (we est. the new NFL deal costs $35M/ yr.) and the fact that the former MLB cost had been bid up by competition between the now merged Sirius and XM. While we don’t know the new MLB terms, we do know that Sirius XM is retaining guidance for lower program costs as rights deals renew. So we believe that for now we can retain our former long-term assumption for an MLB cost step-down in 2016, even though Sirius XM is obtaining expanded rights.

Piolin perspective. Sirius XM announced a deal with Eddie “Piolin” Sotelo last week. Terms were not disclosed. But his “Piolin en la Manana” show was carried by Univision to 50 markets, and was among the top morning drive shows in many markets, including LA, even topping Howard Stern in places when both were on terrestrial. We believe Piolin’s audience is over 3.5M. His departure from Univision was clouded by a report in the LA. Times of allegations from a former co-worker, who was said to be seeking a settlement. We assume that Sirius XM found a reasonable way to become comfortable with this issue, and believe that Piolin could provide a substantial boost to Sirius’ growing efforts with Hispanics.

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There are 5 comments

AUGUST 19, 2013 6:01 P.M.

cayuga6 wrote:

Does this mean that Sirius radios might start carrying MLB games? Or could it mean that a car purchaser could now get either Sirius or XM?

AUGUST 19, 2013 8:56 P.M.

Brett Y wrote:

People with Sirus who have premium or all access can now have MLB.
People who have select subscriptions (lifetime members have this) have to upgrade to premium plan.
For month to month people its $3 more. For Lifetime members you pay a $100 one time fee
XM subscribers already had MLB.

AUGUST 20, 2013 8:42 A.M.

Ice Mann wrote:

I have a Sirius lifetime plan and was already getting MLB online and on the app. Perhaps now I will have it on the car radio.

AUGUST 20, 2013 11:33 A.M.

Jon wrote:

MLB, all the other non-music premium content along with the Agero/Telematics purchase will propel this stock into the $30 range in a couple of years, if it is not bought by Google or Apple sooner.

AUGUST 26, 2013 2:08 P.M.

Karen Openshaw wrote:

Pennystockchief is that dotcom site, which has helped me understand and master SIRI stock

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